New Doubts About Atlantic Yards Financing as Deadline Approaches

On Sept. 9, Bruce Ratner, the powerful developer scrambling to start building a new Brooklyn basketball arena for the Nets, gave a prediction: The credit ratings agencies would deliver ratings on about $700 million in bonds for the arena by the end of the month. The ratings are a necessary precursor of financing the arena, an act that must be finished by Dec. 31 to meet an Internal Revenue Service deadline.

On Sept. 30, still with no ratings, Mr. Ratner, chairman of development firm Forest City Ratner, updated the timetable: The bond ratings would be done by mid-October.

It’s now mid-November, and the word remains the same from the project’s backers: The bond ratings are still at least a week off–hopefully.

As the repeated missed internal schedules suggest, the project is running into trouble at the ratings agencies.

According to multiple people briefed on the situation, the agencies have been pushing back against Forest City in its attempt to get the arena bonds rated as investment grade (BBB-) or better, causing new concerns for the project. (Forest City’s representatives expressed confidence they will receive the needed ratings.)

This significant hurdle comes as the countdown clock ticks. Loudly.

Forest City must first get the bonds rated, then market them, then sell them–and it’s no forgone conclusion that anyone will buy them–and, finally, firm up all final agreements with the city, state, and M.T.A. on the complex real estate deal, all before Dec. 31 (with Thanksgiving and Christmas breaks mixed in). Each of these steps takes at least a few days, if not more than a week, making it hard to see how everything could get wrapped up if the bonds are not rated before the end of November, if not sooner.

ALL IS NOT TO say the deal is doomed. Mr. Ratner, with extraordinary stamina for this project and the outpouring of cash that comes with it amid a recession, has a history of executing. Further, many deals and financing arrangements go through rocky periods, where doubts are raised, before ultimately working everything out as deadlines approach.